It will be a busy week in the US with inflation report and retail sales data taking a central stage. Investors will be also looking for any signs of contagion in the financial sector from the fallout of Silicon Valley Bank. Elsewhere, the ECB and the Bank of Indonesia will decide on the course of monetary policy and China will publish data on industrial production and retail sales. Finally, the unemployment rate will be released in the UK, Australia and South Korea; Q4 GDP growth in New Zealand; CPI and external trade in India.
The upcoming week will be crucial for market participants and policymakers, as the release of the US inflation report is likely to dictate the future path for interest rates. The annual inflation is seen easing to 6% while the monthly rate will likely hit 0.4%. Also, the core consumer prices likely grew 0.4% over the previous month, resulting in the annual rate easing to 5.5% from 5.6%. On the inflation front, it will be also interesting to follow producer price index, exports and imports prices, and inflation expectations for March. Investors will be also paying close attention to retail sales, with forecasts pointing to a modest 0.2% month-on-month gain in February, suggesting tighter financial conditions dragged consumer spending. Other important releases are preliminary reading for the University of Michigan’s consumer sentiment, industrial production and housing data including building permits, housing starts and NAHB Housing Market Index. Finally, a slew of earnings results will provide more clues about the economy’s health. Adobe Systems, Pinduoduo, Dollar General, and FedEx are the most prominent companies to report.
In Europe, the ECB is expected to raise interest rates by another 50 bps to combat high inflation. Data showed the bloc’s inflation slowed further to 8.5% in February, compared with the market consensus of 8.2%, while the core rate hit a fresh record. Traders will also carefully monitor President Christine Lagarde’s press conference, looking for clues on the size of the next rate hike after several policymakers backed the idea of more aggressive tightening. In the United Kingdom, all eyes turn to Chancellor Jeremy Hunt’s Spring Budget statement on March 15, as households hope for more help with energy bills. On economic data, important releases cover the Eurozone’s final inflation figures and industrial production; Germany’s wholesale prices; UK’s job report; and Italy’s industrial activity.
In Asia, China will publish key industrial production, retail sales, labor market, and fixed investment data for both January and February. The numbers are expected to reflect the pick-up in activity after the world’s second-largest economy reopened from Covid lockdowns earlier in the year. In Japan, investors await minutes from the bank’s monetary policy decision and February trade data. Meanwhile, retail inflation in India is set to remain above the RBI’s upper target band of 6% for a second straight month, increasing the likelihood of another rate hike in April. India will also divulge February’s trade balance. Elsewhere, South Korea will release its February unemployment rate, and the Bank of Indonesia will decide on its key 7-day reverse repo rate. In Australia, key reports will include Westpac consumer confidence for March and NAB business confidence for February. On top of that, traders will keep a close tab on unemployment figures, which could provide hints on whether the RBA’s cash rate has peaked. Meanwhile, New Zealand will reveal its fourth-quarter GDP growth.